Xcel Energy’s subsidiary, Southwestern Public Service Company (SPS), entered into a definitive Electric Service Agreement with Fermi America that will provide up to 200 MW of electrical capacity to the company’s 11 GW Project Matador campus in Amarillo, Texas. The contract, announced on December 5 2025, stipulates that SPS will begin delivering 86 MW of power in January 2026 and will scale to the full 200 MW as the data‑center project expands.
The agreement is a key component of Xcel’s $60 billion capital‑investment plan for 2025‑2030, which prioritizes grid reliability, clean‑energy integration, and the growing demand for data‑center power. By securing a long‑term, high‑capacity contract, Xcel gains a foothold in the AI‑driven data‑center market—a sector projected to grow faster than the broader electricity market. The deal also supports Xcel’s clean‑energy goals, as the Project Matador campus will incorporate a mix of natural gas, nuclear, solar, and battery storage.
Financially, the 200 MW contract is expected to generate stable, long‑term revenue for Xcel. While the exact pricing structure is not disclosed, the agreement’s duration and capacity suggest a predictable cash flow that will contribute to Xcel’s regulated utility earnings. The contract aligns with Xcel’s strategy to capture a share of the high‑margin data‑center market, which is expected to become a significant portion of the company’s retail sales growth.
Project Matador, the 11 GW AI data‑center campus, is one of the largest private grids in the United States. Fermi America plans to power the campus with a diversified energy mix, including nuclear reactors, solar, and battery storage, and estimates the total project cost at $70‑$90 billion. The company’s financial outlook remains cautious, with analysts projecting a modest negative EPS for the current year, reflecting the substantial capital outlay required to build the campus.
Management comments underscore the strategic importance of the partnership. Larry Kellerman, Chief Power Officer of Fermi America, said the agreement “demonstrates that reliable, large‑scale energy for artificial intelligence can be developed on time and on budget.” Adrian Rodriguez, president of Xcel Energy Texas‑New Mexico, noted that the company is “focused on meeting the growing energy needs of the Texas Panhandle and is pleased to work with Fermi America on this project.”
Analysts view Xcel’s data‑center strategy positively, citing the company’s robust capital plan and its focus on clean‑energy integration. The partnership with Fermi America is seen as a concrete step toward capturing a high‑growth, high‑margin segment, reinforcing confidence in Xcel’s long‑term revenue prospects.
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